Colorado Republican Party Chair Seeks Exemption to State Campaign Finance Law for “party-sponsored” Independent Expenditure Committee

Colorado Republican Party state chairman Ryan Call is seeking an exemption to state campaign finance rules in order to establish a “party-sponsored” (using the “Republican” party name) “Independent Expenditure Committee” that would not be subject to the contribution limits applying to the party itself.

The Colorado Republican Party, at Chairman Call’s direction, filed a Petition for Declaratory Order last November (essentially, asking for a “Get Out of Jail Free” card in advance) from Colorado Secretary of State Scott Gessler “requesting confirmation” that the party’s independent expenditure committee ”may raise funds in any amounts from any source.” (Petition for Declaratory Order, Introduction)

Following a period allowing public comment to be submitted in writing (see below; with the single exception of former state Republican party attorney John Zakhem, universally opposed to the petition) the Secretary of State’s office held a public hearing on 7 January 2014.

Background and Constitutional/Statutory Framework

Following the passage of Amendment 27 in 2002 (enacted as Article XXVIII, Colorado Constitution), contribution limits have applied to organizations supporting or opposing candidates in state elections – including political parties. Under current Colorado law, political parties may accept a maximum of $3,400 per year (state, county, local levels combined) in aggregate (total) contributions from any individual – and are prohibited from receiving contributions from corporations or labor organizations (unions).

Colorado Republican Party State Chair Ryan Call, represented by his law firm partner (and designated party attorney) Richard Westfall, filed a petition seeking the Secretary of State’s advance blessing (via a Declaratory Order) for an entity combining the features of an “independent expenditure committee” (no contribution limits to amount and/or source) with the Republican party label (and, presumably in some form at least, party control) – in many respects, seeking to “have their cake and eat it, too.”

The COGOP advanced the following arguments in support of their petition:

Supreme Court precedent affirming the right of political parties to make independent expenditures

“Independent expenditures” are allowed so long as there is no coordination

“Any person” may make independent expenditures

“Independent Expenditure Committees” are not subject to contribution limits or source prohibitions

Additionally, the petition asserted that “the Republican party’s Independent Expenditure Committee will be structured and operated to ensure that no expenditures will be coordinated with candidates.”

Counterarguments to COGOP petition

The COGOP petition spends an inordinate amount of space asserting the right of political parties to make independent expenditures – a fact that is not in dispute. The party is already able to make independent expenditures without necessarily having to form a separate committee (arguably, this is a default function of party organizations anyway). The dispute arises from conflating the ability to make independent expenditures with the ability to receive contributions without limit to amount or source that is a special feature of IECs under Colorado law.

Critics from across the political spectrum (from “Colorado Ethics Watch,” a.k.a. CEW, pronouced “sue” – it’s what they do, on the “Left” and OGRE Exposed, on the grassroots “Right”) highlighted the fact that the case law precedent is clear that party organizations are subject to legislation imposing contribution limits:

“While the CRP petition is correct that under federal constitutional law a political party may not be prohibited from making independent expenditures that do not count towards candidate contribution limitations, case law does not support a right for political parties to fund such expenditures with unlimited and unregulated money.” (CEW opposition statement to petition at 5)

Similarly,

Yes, political parties can constitutionally make unlimited independent expenditures. But this does not free them from contribution limits imposed on them by campaign finance laws. Unfortunately, under current Supreme Court precedent, contribution limits imposed on political parties are still constitutional. … The point is not that contribution limits are a good thing, they are not, but that Chairman Call is not being straightforward when claiming Supreme Court precedent supports what he is trying to do.” (OGRE Exposed, Response to Ryan Call re: Independent Expenditure Committee, at 2)

Additionally, the COGOP chair’s assertion of “significant structural and operational protections” preventing coordination is risible, as is the very notion that an entity owing its existence to the state party, with the director and management committee appointed personally by the state party chair, would be “independent” in any sense of the word. Such an entity is almost by definition “pre-coordinated” – although it would not be constrained by party bylaws (bylaws theoretically restricting, for example, the IEC’s ability to spend or promise spending in order to influence primary elections).

Reliance on the enforcement provisions of Rule 1.4 (Coordination) to sanction any such suspected coordination is likewise hollow – since multiple cases have shown that absent an airtight confirmed “smoking gun” to the extent of a notarized confession signed in the perpetrator’s blood in front of multiple witnesses, “coordination” will never be prosecuted.

Secretary of State Hearing, 7 January 2014

Interestingly, all of the above arguments will likely be rendered moot due to a jurisdictional issue raised at the Secretary of State’s Hearing on 7 January. In order for the Secretary of State to issue a Declaratory Order, the Secretary must first determine if it will resolve the controversy at issue; any Order must terminate the controversy or resolve the issue.

Since Colorado has a system of private party enforcement of campaign finance law – any person may file a Complaint (in this case, against the “party-sponsored” IEC) and any individual donor could also be the subject of a complaint, as could other candidates or candidate committees on whose behalf the IEC makes expenditures – a Declaratory Order could not “resolve the controversy” since it would not be binding on potential Complainants.

Quo Vadis?

Clear The Bench Colorado‘s analysis is that the Secretary of State will not issue a Declaratory Order in favor of the COGOP Chair’s petition, most likely based on jurisdictional grounds, as noted above. In addition to the jurisdictional reasons, there are multiple substantive issues with the petition’s arguments (which are largely unsupported by a critical reading of applicable case law and constitutional precedent). From a purely political perspective, a ruling in favor of the petition by the office of Secretary of State Gessler would certainly be seized upon by his political opponents (both intra-party and inter-party) given his current candidacy for governor positions him as a potential beneficiary of IEC spending, despite the fact that he did not participate personally in the hearing (or, likely, the forthcoming ruling).

The Colorado Republican Party could, presumably, still proceed with setting up a “party-sponsored” IEC, but would do so at great risk, both to the party itself and any donor who exceeded the statutory contribution limits (a successful complaint would result in fines and penalties of 2-5 times the amount by which the contribution exceeded the limits). Even a successful defense against a complaint would cost the party tens of thousands in legal fees (on top of the $10,000 reportedly already spent by the Colorado Republicans just to argue the petition – although, since that money is paid directly to the chair’s own law firm, which also pays him a salary, that may be a risk that he personally is willing to take with party funds).

Clear The Bench Colorado generally opposes the imposition of contribution limits or other restrictions on free speech in the civic and political arena (see, Speaking Out on Reforming Colorado’s Campaign Finance Laws) as unconstitutional abridgments of the 1st Amendment; in particular, the excessively complex and convoluted nature of campaign finance laws in Colorado challenge the Constitution, chill free speech, and curtail civic participation. Any such laws that do remain in effect, however, must be fairly and equitably applied to everyone – with no “special exemptions” for favored entities. It is our view that the COGOP Chair’s petition is an attempt to create just such a “special exemption” and should be denied.

Read more about the COGOP Chair’s attempt to skirt Colorado Campaign Finance Law